What your clients need to know about appraisals

With the wait time for complete appraisals having lengthened dramatically in the mortgage application process during the course of the pandemic, one Ottawa broker is advising mortgage professionals to communicate that reality clearly to clients in the coming months.

Chris Allard (pictured), of Smart Debt Mortgages, told Canadian Mortgage Professional that with appraisals now taking much longer to complete – often weeks – borrowers needed to be fully aware of the risks of bidding on a property with an insufficient closing timescale.

“In the Ottawa area, one of the biggest challenges that we’re seeing on transactions is the idea that there are still many people who are putting an offer with a 30-day or 45-day closing, which is OK,” he said.

“However, appraisals take a few weeks these days, where they used to take a couple of days. It’s very challenging to do these quick-close files in 30 days or less – because if the appraisal takes two or three weeks, that’s most of that timeframe spent just waiting on it.”

Allard said that brokers needed to communicate to their clients that they should aim for a longer closing period attached to their offer to ensure breathing space and margin for error in the case of further unforeseen delays in the appraisal process.

Read more: Navigating appraisals through the pandemic

“Part of our preapproval process [at Smart Debt] is really talking to buyers and strongly suggesting that they try to have a closing date that’s maybe 60 days away rather than the 30-day closing,” he said, “because we don’t want to have any issues with delays on appraisals.

“If we’re doing our job, we should be trying to share as much information up front with our potential clients.”

While it’s sometimes taken for granted that lawyers at the closing stages of a mortgage application are able to turn files around quickly, Allard also said that it was important to ensure that clients’ closing dates do not fall on specific days during the month – at the beginning, middle or end – because of the fact that those are often the most hectic times for legal professionals.

Read more: How you can help lawyers close faster

“That’s another thing we talk about – making an effort not to have a closing date that’s on the first of the month, the 15th, or the last day of the month,” he said.

“The reason we tell people that is their lawyers are extremely busy on those days and because of the amount of transactions in the marketplace these days, lawyers are having a hard time keeping up and closing the files on time.”

Ensuring that the closing date does not coincide with the lawyers’ busiest period of the month, Allard said, could ensure peace of mind for broker and client alike – and a smoother all-round experience.

“If you want to have a more stress-free process, it’s ideal if the closing date of your home purchase is not on the 1st, 15th, or the end of the month,” he said.

Recent weeks have given mortgage professionals the chance to meet with their clients in person, following a long period of remote work arrangements and virtual signings. Allard said that while connecting by phone or video call was usually a more convenient solution for broker and client alike, it was important for brokers to show flexibility towards those customers who preferred to meet face-to-face.

“There are plenty of clients who, if given the opportunity, would still prefer to meet you in person, shake your hand, and see you scribble down the notes and give them examples in person,” he said.

“I think mortgages are daunting for some people, and if those individuals do prefer to meet in person, I’m absolutely happy to do that.”

That said, Allard noted that the transformation brought about by the pandemic – with brokers having increasingly turned to digital solutions in their day-to-day business – was likely to have a profound impact on the future of the profession.

“I think there will be some of the business that will go back to in-person [meetings],” he said, “but I definitely don’t see a world where it’s 100% of our customers like it was three or four years ago.”